Senate Education Committee Chair Tom Harkin (D- Iowa) unveiled legislation yesterday that would allow a small portion of Americans’ student debt to be discharged through bankruptcy proceedings, the Wall Street Journal reported yesterday. Federal law currently prohibits, except in rare cases, private or federal student loans from being discharged in bankruptcy. Backers of the current law, including the banking industry, have argued that it helps keep a lid on interest rates by reducing the risk that borrowers will walk away from their debts in court. Consumer advocates say that the prohibition is keeping some borrowers trapped under high debt burdens that they’ll likely never be able to repay. Harkin’s measure would allow only student loans issued by private lenders — rather than the federal government — to be discharged in bankruptcy court. Private lenders hold only about 10-15 percent of the nation’s $1.1 trillion in outstanding student debt, with the U.S. Education Department holding the rest. The bill’s prospects for passage this year are not favorable given the midterm elections and broad partisan disputes over higher-education policy. (Subscription required.)
http://blogs.wsj.com/economics/2014/06/25/harkin-opens-door-to-bankrupt…
For additional perspective on student loan debt, be sure to utilize the following infographic from the Credit Abuse Resistance Education (CARE).
http://care4yourfuture.org/student-debt
Miss ABI's Student Debt Symposium on May 30? You can purchase all sessions from the program on ABI's eLearning site! Click here to browse and purchase the sessions.
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